Taking Jacinda Seriously New Political Dynamics Parties Poles Apart on Climate Change Policy Multi-National Tax Law Changes Lots

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Taking Jacinda Seriously New Political Dynamics Parties Poles Apart on Climate Change Policy Multi-National Tax Law Changes Lots HUGO Assessing the economic and political environmentvision in New Zealand Confidential to August 4 2017 HUGO members Taking Jacinda seriously Page 2 No one yet knows how powerful the ignition of hope and momentum created by replacing Andrew Little with Jacinda Ardern will be. But no one is taking it for granted. Senior National Party members and ministers are saying “give it a week’ rather than “forget about it”. New political dynamics Pp 2&3 Labour ‘s leadership change is achieving what Metiria Turei achieved for the Greens a fortnight ago with her ‘benefit bomb’ disclosure – creating almost exclusive political media focus. In the next few days, Ardern’s performance is crucial as she relaunches a tweaked campaign slogan and presents major new policy on Auckland transport. Parties poles apart on climate change policy Page 6 National announced substantive elements of its climate change policy, including an intention to auction NZ carbon units and to limit NZ emitters’ access to international carbon markets to meet the country’s Paris agreement commitments. But National is cold on putting commitments into law, while Labour, the Greens and NZ First back creation of a Climate Change Commission. Multi-national tax law changes Page 4 With the OECD moving in synch to close down commonly exploited cross-border tax avoidance ploys, the govt is upping its estimate from $100m to $200m in additional tax revenue annually as it announces tax law changes to attack practices that , in some cases, the NZ courts had already begun striking down. Lots of independent possibilities Page 3 This election is unusual for the number of potential one-MP parties that could be represented in the next Parliament. Peter Dunne, Te Uruora Flavell, David Seymour and Hone Harawira are all in the mix, but perhaps most intriguing is Christchurch City councillor and former merchant banker Raf Manji’s bid to unseat Gerry Brownlee in Ilam. Wheeler’s last stand Page 6 Next week’s Monetary Policy Statement will be the last in RBNZ governor Graeme Wheeler’s sometimes unhappy five year tenure. Job numbers this week gave equivocal signals – job growth and participation rates were down, but so was unemployment, while full time work and wages are robust. There is little argument for either a tightening or an easing bias at present. Auditor-General resigns Page 6 The suppression by a parliamentary select committee into its report on the outgoing Auditor- General Martin Matthews’s performance over a $750,000 fraud when he was ceo at the Ministry of Transport is at odds with the transparency essential for a country whose incorruptibility is one of its global sources of differentiated competitiveness. Text finalised August 4 Contact: [email protected]. No responsibility is accepted for acts or omissions by clients as a result of items herein. © The Hugo Group 2017 HUGOvision August 4 2017 POLITICS AND POLICY A campaign transformed of Labour’s problem in recent weeks. Had the Ardern story not happened this week, Bill English’s As David Farrar noted in last month’s Hugo Group apparently popular Monday announcement the breakfast briefings: “Campaigns matter.” Trump govt is dropping the primary school decile funding and Corbyn are the go-to current examples, and the system might have set the political tone for the question is now whether replacing Andrew Little week after a quiet couple of weeks from National with Jacinda Ardern has transformed Labour’s hopes while Metiria Turei dominated headlines. of leading the next govt. Worth noting as a harbinger of a more unsettled Tuesday’s note, immediately after her elevation, electorate is the sharply deteriorating trend in suggested success for Ardern was as simple as doing UMR’s ‘right track/wrong track’ measure for NZ, better than 25%. The injection of hope into both long regarded as a bellwether for electoral success. Labour and centre-left voters that the appointment Last December, the reading was 65 right-track to 24 of a telegenic 37 year-old who could become NZ’s wrong-track. That had fallen to 57-33 in June and 53- Justin Trudeau or Emmanuel Macron has created 35 by late July. is extraordinary. More than $300k in small member donations have flowed to the party since Tuesday. Jonathan Coleman’s grasp on the health portfolio is also looking distinctly untidy, with widespread Labour’s social media presence suggests the old acceptance that mental health services are creaking campaign slogan – “a fresh approach”– may be and that the Dunedin public hospital service is replaced with “let’s do this” – a call to action that failing. would capitalise on the sudden sense of momentum the risky late leadership change has created. How the parties are tracking The big question that remains is this: will Ardern’s As they head into the campaign proper, our elevation grow the centre-left vote or just the Labour assessment of the parties’ relative momentum is: vote. Both the TV network polls published before Andrew Little stepped down showed Labour losing • National had been out of the news during Metiria- ground either to the Greens (TVNZ Colmar-Brunton) gate and appeared to have shaken off the Todd or NZ First (Newshub Reid Research). Unless she can Barclay affair before the Labour leadership change. reach across the political aisle, National’s position At 47% in the latest Colmar-Brunton poll, taken at 45%-plus will still leave it in the best position to while the Greens effectively robbed Labour of form a govt. In effect, National now faces a Labour around 4% support, National should well-placed to Party looking as competitive as it would have been form the next govt. English used to live by a theory reasonable to expect under any Labour leader. The that National was always advantaged “every time main challenge now for National now is that Ardern people see Metiria Turei on TV”. His own shaky will easily outshine him on electronic media and as record as a campaigner matters more now that the the face of a new generation of political leadership. unengaging Little is replaced by Jacinda Ardern, assuming she campaigns well; Crucially, the media are now talking about Labour instead of everybody else, which was a big part • Until mid-morning Tuesday, Labour was in terrible trouble, looking at The campaign can matter – UK 2017 its own version of National’s 2002 election nadir, when it polled 22%. Redemption beckons under a new leader and more importantly, Ardern’s elevation delivers a powerful dose of hope to NZers who want to change the govt but couldn’t see how it would be done. A noted, drawing votes back from the Greens and NZ First won’t be enough; 2 HUGOvision August 4 2017 POLITICS AND POLICY • The Greens drowned out Winston Peters’s Party’s Hone Harawira. There has been some election year conference with Turei’s simultaneous inspired political thinking by party president Tuku disclosure about historical benefit fraud. This has Morgan, but sound execution has proved difficult. clearly stuck a chord with Labour voters, but might Thoughts last year of a clean sweep in the Maori it be putting off a group that National is worried seats are a distant memory; about – urban National supporters who don’t like • ACT’s David Seymour has done a good job as a dirty rivers and the dairy industry are tempted by lone MP re-establishing ACT as a party of political the Greens? National’s campaign, once launched, is principle and Epsom will vote as directed, but likely to target this group; ACT feels tired and may lose support to TOP, • NZ First may have peaked. Winston Peters has as evidenced by TOP’s threat to stand Gareth campaigned to ‘save the regions’ at a time of Morgan in the electorate (now changed to TOP booming activity in many regional economies. campaigning in Epsom for the party vote); His conference performance was tired and his • United Future’s Peter Dunne has a hold on the traditional iron discipline over party doctrine is Ohariu electorate that shows no sign of loosening, slipping as Ron Mark and Shane Jones mark out especially given the invisibility of Labour’s territory to be his successor. But he’s still the best candidate, former police union spokesman Greg chance either National or Labour-Greens will have O’Connor; to form a govt. The Greens dare to hope they’ll be a much larger party than NZ First in the next • Raf Manji, independent for Ilam. Manji’s Parliament, limiting Peters’s capacity to dictate terms; campaign announcement flew under the radar with national news media, but he is said to be • The Opportunities Party: according to both this making inroads with the blue-blooded voters of week’s public polls, TOP made 2%, ahead of Ilam. If anyone has a chance of toppling Gerry support expressed for any of the three govt support Brownlee, who’s held the Christchurch suburb parties: Maori, Act, United Future. Its campaign since 1996 and had a majority of 11,898 in 2014, has appeared to be building, Gareth Morgan is it’s the former merchant banker who is highly getting large crowds in regional centres, stirring regarded for his stewardship policy debate that is resonating across the political of Chch City Council’s finance spectrum, and Morgan is able to underwrite a committee through the rebuild CEO Retreat healthy campaign budget. The party seriously so far. Manji wants to be Minister There are still a couple of hopes it can make 5% on election day, its metric of Chch Regeneration in the next places left for this year’s CEO Retreat, Aug 24-26.
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